Do you need to pay tax or file ITR when moving funds from savings bank to NRO account?

Do you need to pay tax or file ITR when moving funds to NRO account?

• Transferring savings to an NRO account does not trigger tax by itself
• Tax depends on where salary is credited and your physical stay in India
• ITR filing is needed if taxable income exceeds the exemption limit

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Curious if transferring savings from an old Indian account to a new NRO account triggers tax or requires filing an ITR? Today’s Ask Wallet Wise explains your bank’s role in converting the account and how tax depends on salary credit and your stay in India.

Ask Wallet-Wise initiative offers expert advice on matters related to personal finance and money-related queries. You can email your queries to askwalletwise@nw18.com, and we will try and get a top financial expert to address.

I am an Indian working in Qatar with Rs 30 lakh in my old Indian savings account. If I transfer this amount to a new NRO account, are there any tax implications, and do I need to file an ITR?

Expert's Advice: Under the FEMA provisions, a person becomes a non-resident as soon as they leave India to go abroad to take up employment or to start any business or profession outside India or for any other purpose with an intention to stay out of India for an indefinite period.

So ideally, you should have intimated your bank about you having taken up employment outside India immediately after leaving, and the bank would have designated your existing account as an NRO account. You need not open a new NRO account. Just intimate your bank that you have become a non-resident with a request that you designate your existing bank account as NRO.

Though you have technically not complied with the FEMA requirement strictly, this happens with almost all the people who take up employment outside India and does not have any income tax implications.

I presume that the salary was first received in your bank account in Qatar and later on transferred to your bank account in India. In case the same was directly credited in your bank account in India by your employer, it becomes taxable in India even if you are a non-resident for income tax purposes.

In case the same was first credited there in Qatar, the exact tax implications would depend on your physical stay in India during each of the financial years. So, in case you were physically present in India during the previous year for 182 days or more, even salary credited in your Qatar bank account will also become taxable in India. You will have to file your ITR if the taxable income exceeds the basic exemption limit applicable to you.

Disclaimer: The views expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.